Image source @ Visual China
Titanium Media App launched the industry reporting topic "Silicon-based World", which has long been concerned about the technology and industrial upgrading in the global semiconductor field, and has insight into the first-hand information and in-depth trend of the industry.
In the past two weeks, the global chip semiconductor giants have opened a new round of arms race.
On February 14, AMD announced the completion of its acquisition of FPGA chip giant Xilinx, which was about $50 billion, the largest merger in the semiconductor industry, and then the stock price rose sharply, and AMD's market value surpassed Intel for the first time.
The next day (February 15), Intel suddenly announced the acquisition of Tower Semiconductor, an Israeli wafer foundry, for a total of $5.4 billion in cash, which is expected to accelerate the development of its chip foundry business and increase revenue by nearly 10 billion.
Intel CEO Kissinger and Qualcomm recently threatened to acquire British chip design company Arm through a consortium - Nvidia's $66 billion merger and acquisition failure, but Nvidia still obtained Arm's 20-year ARM architecture authorization, continuing to consolidate its dominant position and intensifying market investment competition between chip companies.
On February 15, TSMC announced that auto parts manufacturer Denso will invest $350 million in the Japanese joint venture plant of TSMC and Sony to obtain a slightly more than 10% stake to meet the capital needs of TSMC's expansion plant; at the same time, Samsung, Intel, Qualcomm, and Infineon have also announced plans to continue to expand production and invest, while SMIC has a layout in Beijing, Shanghai, Zhejiang, Guangdong, and Tianjin, with a total investment of more than 76 billion yuan in the construction of new plants. At last week's earnings report, it was also announced that it would continue to invest in the expansion of mature processes such as 40nm.
On February 18, 19 shareholders such as Alibaba, Tencent, and Xiaomi Yangtze River Industry Fund invested in the parent company of domestic DRAM manufacturer Changxin Storage and integrated circuit developer "Ruili Integration", according to media estimates, this round of investment will exceed 10 billion yuan. Previously, the company had obtained 15.65 billion yuan of financing from institutions such as The Second Phase of the Big Fund and Gigabit Innovation. However, it is reported that until around November last year, Changxin Storage began to provide DDR3 memory chip products, and its competitors Samsung and SK Hynix of South Korea have already launched DDR5 flash memory chips, and the market is in short supply.
At present, chip semiconductor giants have opened the road of mergers and acquisitions, investment, and expansion, and Intel, AMD, and Nvidia, the "chip three giants" of the United States, continue to consolidate their dominant position through horizontal mergers and acquisitions. Relatively speaking, the development of the domestic semiconductor industry is still in the early stages, the large market has not appeared like NVIDIA, Qualcomm and other chip giants, Ali, Tencent, Xiaomi's investment layout has not allowed chip companies themselves to form a wide range of commercialization, coupled with the "better to buy" mindset, obviously and Intel, AMD, Qualcomm these chip giants to form a gap.
Among them, as the most coreless Chinese auto companies and autonomous driving manufacturers still do not enjoy the "welfare" of domestic chips, relying heavily on chip solutions designed by Intel, Nvidia, Qualcomm and other American companies.
For example, at the Beijing Auto Show last April, Baidu and Geely's joint venture Extreme Car will launch a "car robot" (Robocar), which has built-in Nvidia Orin chip solutions, while Niolai's latest ET7, Xiaopeng G9, and Ideal One are also equipped with NVIDIA Orin chips, and Great Wall's WEY Mocha, Haval H6 and other models use Intel Mobileye EYEQ4 solutions.
NVIDIA CEO Jen-Hsun Huang delivers a speech at the 2016 Baidu World Congress (Source: Nvidia)
Zhang Hong, head of a chip design company, said in an interview with titanium media App recently that although NVIDIA's things are in use, some downstream customers told them that the current lack of core price increases is serious, customers are plagued by NVIDIA and other American chips, and they urgently need domestic chips to make up and replace, but now there is no domestic advanced GPU processor chip - you know, domestic GPU rookie Moore thread, Biling Technology, Mu Xi integrated circuit three have obtained more than 10 billion yuan of financing, It is much higher than the total investment in the entire commercial aerospace sector in 2021, but its technology and products cannot yet be supplied to downstream enterprises.
So, under the world core shortage, mergers and acquisitions, investment, and expansion have become a new strategic means for American and European chip semiconductor companies to consolidate their dominant position, what inspiration does this inspire Chinese companies? Chinese companies are plagued by dependence on US chips, how to better solve this problem?
The United States and Europe launched a chip arms race to affect Chinese semiconductors
Recently, the European Commission passed the European Chip Act, and the US Competition Act of 2022, which passed the US, includes the Chip Act.
Among them, the European Union has proposed to invest more than 43 billion euros to boost the European chip industry and reduce Europe's dependence on US and Asian companies; the US government has allocated nearly 300 billion US dollars for research and development and subsidies in semiconductor, automotive key components and other industries, as well as to solve the growing supply chain problems, and to improve its competitiveness with China.
The core purpose of the two chip bills is to provide subsidies to local chip companies so that they will not be relocated by subsidies from other countries. At the same time, the bill hopes to attract large factories such as TSMC and Samsung to build factories.
With the continued shortage of chips and insufficient production capacity, with the support of financial incentives from various governments, chip giants such as Intel have actively promoted, whether it is semiconductor companies or countries around the world, they all want to seize the next commanding heights, and chip manufacturing is a necessary link.
On February 15, 2022, U.S. chip giant Intel announced a cash acquisition of High Tower Semiconductor, an Israeli wafer foundry, for a total price of US$4.5 billion (about 28.505 billion yuan), which is expected to boost the revenue of its chip foundry business.
Intel's acquisition of Israel's high-tower semiconductor is the world's ninth largest foundry, focusing on analog chip production, serving the mobile, automotive and power supply markets in the professional technology of radio frequency (RF), power supply, silicon germanium (SiGe), industrial sensors, etc., and operating foundry business across regions. Its facilities are located throughout the United States and Asia, serving chip design companies.
With a current market capitalization of $3.594 billion, and Intel's premium of more than 50% to bring its revenue under its command, the importance of high-tower semiconductors is self-evident.
It is worth mentioning that Gaota Semiconductor and Chinese semiconductor companies have a certain cooperative relationship. According to a document obtained by the Foreign Affairs Office of China's Jilin Province, according to a document obtained by the Titanium Media App, since October 2016, Jilin has promoted Changchun Changguang Yuanchen Microelectronics Company to carry out technical cooperation with Israel's high-tower semiconductors, including wafer foundry and the establishment of technical production lines.
On December 29, 2017, the Jilin Provincial Department of Industry and Information Technology disclosed in the "Industrial Project Situation" carried out in cooperation with Israel and the United States that Changguang Yuanchen Microelectronics, under the guidance of High Tower Semiconductor, "began to build the world's third process production line that can carry out the manufacture of back-illuminated CMOS image sensors". The project will completely break the foreign technology blockade and meet the huge demand for high-performance CMOS image sensors in China's civilian field, the document said.
In addition, Changchun Institute of Optics and Machinery has also proposed the intention of cooperation with Gaota Semiconductor, which has been highly valued by Jilin City.
Therefore, Intel's acquisition of Tower Semiconductor will directly affect the cooperative relationship between Tower and Chinese semiconductor companies.
Industry research institute "Core Strategy Research" pointed out that once this acquisition is successful, it will not have an impact on the domestic semiconductor industry in the short term, and it will have a certain impact in the long term, and China should be cautious. When tall tower semiconductors become part of the US semiconductor revitalization plan, whether they will vigorously support the US industrial chain and what kind of fate will be encountered by Chinese domestic customers are uncertain factors. China needs to look carefully at the stakes and carefully assess the impact on the domestic semiconductor industry.
Meanwhile, Intel's rival, U.S. chip giant AMD, successfully completed the Xilinx acquisition, strengthening AMD's own commercial closed loop.
On February 15, AMD announced the completion of its acquisition of Xilinx in an all-stock transaction valued at US$49.8 billion (316.5 billion yuan). Following the acquisition, AMD CEO Zifeng Su will continue to serve as CEO of the company, and Xilinx President and CEO Victor Peng will join AMD as President of the newly formed Adaptive and Embedded Computing Group (AECG). After the merger of Xilinx is completed, AMD has become another semiconductor manufacturer with three major product lines of CPU, GPU and FPGA after Intel.
Titanium Media App learned from sources that after the acquisition is completed, Xilinx China business will be integrated into AMD's Adaptive and Embedded Computing Business (AECG) in Greater China, and AMD has not proposed measures such as layoffs for Xilinx China team.
Tan Zhangxi, director of the RISC-V International Foundation, co-director of the RIOS Turing Award Laboratory, founder and CEO of ResysChip, said in an interview with Titanium Media App that the AMD-Xilinx acquisition can be approved more because of the fungibility of Xilinx FPGA/ASIC products in the market, and the scope of application is mainly limited to communication technology and data acceleration.
He stressed that there are many factors that can be passed by M&A transactions, including the game of interests between each other and the supervision of government agencies. If the client has little impact, is very substitutionary, and is not even a non-professional in a particularly familiar field/enterprise, the probability of passing the M&A approval is high.
However, this year's chip mergers and acquisitions arms race between the United States and Europe has not been participated in by Chinese companies. Under the world's core shortage, mergers and acquisitions, investment, and expansion have become a new strategic means for American and European chip companies to form a moat, what inspiration does this have for Chinese companies?
Some people in the semiconductor industry said that China, as one of the world's largest electronics markets, in this round of chip arms race, in the face of major international semiconductor mergers and acquisitions, China needs to improve its sense of participation. Under the huge trend of localization and the demand of the global semiconductor market, through mergers and acquisitions, it is necessary to maximize the interests of China's industry and market. However, mergers and acquisitions still have risks, including the risk of supervision and large "break-up fees" after the failure of acquisitions.
"This is a paradoxical event, and it depends more on the company itself." said the above-mentioned person.
For the domestic semiconductor industry, enterprises should explore a new path and rely on themselves to solve the problems in these acquisition processes. How to deal with international semiconductor acquisitions under the new situation, sober cognition will be more conducive to the benign development of the domestic semiconductor industry, but also more conducive to planning the future development path of the domestic semiconductor industry.
Chinese companies are deeply troubled by the dependence of US chips
With the united states and Europe launching a chip arms race, chip giants such as Intel, AMD, and Qualcomm have adopted an investment expansion model to consolidate their dominance.
However, Chinese autonomous driving companies rely on these giants' chip products, and are deeply troubled by this, and now they hope to get domestic chips to replace, but there is no such domestic chips in the market, especially now that the world is in the absence of cores and prices.
Zhang Hong told the Titanium Media App: "One reason is that NVIDIA may have raised prices very much last year, and the price of the chip itself has risen, and more is the price increase of intermediate boards and channels. So for OEMs, when they get it, the price is expensive, which is what they don't like; the second is that the Chinese market is only a part of NVIDIA's market, especially China's corporate customers may be out of stock now, so they are not satisfied with NVIDIA's services; the last one is that in the case of shortage, in fact, customers are really helpless, everyone in the time of each shows their magic, a large number of goods are very difficult, which has caused trouble. ”
Bayn & Company semiconductor industry expert Velu Sinha said NVIDIA has "a 10-year lead" thanks to the success of its GPU (graphics processing) technology. Even with countless funds pouring into this area, Nvidia is still in a leading position.
Market consultancy McKinsey predicts that by 2040, self-driving cars will account for 40 percent of new car sales in China, generating nearly $1 trillion in car sales and $1.1 trillion in travel services.
According to the Semiconductor Industry Association, Chinese chip design (non-manufacturing) companies that benchmark Qualcomm and Nvidia already have a 16% global market share, and at least 18 different Chinese companies have their chips as a key part of their autonomous driving plans. But in terms of advanced chip manufacturing, China has not yet been able to supply it.
It's not just self-driving companies. In the data center field, most of the server products of Inspur, Tencent Cloud, Alibaba Cloud, Baidu Cloud and other enterprises still have built-in Intel, Nvidia, and AMD chip products. SenseTime told Titanium Media App that their latest AIDC data center will also use ai chips with more advanced processes - that is, NVIDIA + Cambrian dual-chip solution.
As for the mobile phone field, Qualcomm Snapdragon 8 series flagship chips firmly occupy the high-end mobile phone products of domestic manufacturers.
So, Chinese companies are plagued by dependence on US chips, how to better solve this problem?
Zhang Gaonan, the managing partner of Huaying Capital, said in an interview with Titanium Media App that China is not entangled in how to replace NVIDIA, and the road is step by step. First of all, China must have domestic AI chips, general GPUs, FPGAs and other underlying computing power. As long as there is a domestic market demand, Chinese companies must have many opportunities.
He believes that China now needs to cut into the GPU market, especially semiconductors and next-generation AI technologies are areas where China must break through.
At present, it is plagued by American chips, which requires domestic companies to continuously digest themselves, establish cooperation links with chip manufacturers, and replace domestic chips step by step. However, these domestic chip companies such as NVIDIA and Qualcomm are still in the initial stage of development, and the industrialization and marketization capabilities of Chinese mainland chip manufacturing technology are weak, and there is no actual large-scale use, and Chinese companies are still a long way from surpassing or replacing NVIDIA.
We note that TSMC recently announced plans to increase capital expenditures by $44 billion this year, an increase of 150% year-on-year, especially since these funds have been invested in the field of advanced chips.
But by contrast, SMIC's planned capital expenditure for 2022 is $5 billion, and it is no longer invested in advanced processes within 7nm – the core reason is that it has not received ASML's extreme ultraviolet (EUV) lithography machine.
Therefore, some experts believe that SMIC is still about 5 years behind TSMC in terms of technological development.
(This article was first published on the Titanium Media App, the author | Lin Zhijia, and the interviewee Zhang Hong is a pseudonym)